All posts by Gerard Jackson

The link between free trade, the nineteenth century business cycle and the gold standard

Gerard Jackson
28 November 2022

Peter Smith1, Steve Kates2, John Quiggin3 are economists. Smith and Kates are on the right while Quiggin is on the left. Despite their political differences all three have serious doubts about the benefits of free trade. I’ll begin with Steve Kates who made this important observation on free trade:

But you know what was also current then [in the nineteenth century]? The gold standard. There are many ways this process of comparative advantage breaks down, but with the abandonment of the gold standard and fixed exchange rates, there are all kinds of ways to cheat in foreign trade relations that are not discussed as part of the basic theory4.

Unfortunately, this was too much for Professors Sinclair Davidson and Judith Sloan with Davidson making the absurd accusation that Kates believes the theory of comparative advantage is wrong because the world is not on gold. Sloan wasn’t much better, calling Kates’ point about gold a “dud”. The only duds here are Davidson and Sloan. At a later stage we shall see why classical economists considered gold crucial to maintaining free trade and why Kates’ view that comparative advantage broke down is misguided. Peter Smith, like nearly all economists, does not link the gold standard to the principle of free trade, even going so far as to emphatically state that there is no such thing as “free trade”5.

Professor Quiggin, who confesses to being something a “heretic on free trade”, takes a macroeconomic approach to nineteenth free trade, arguing  that it created the  “impossible trinity”, according to which governments

Continue reading The link between free trade, the nineteenth century business cycle and the gold standard

The globalists’ policy of open borders would be catastrophic for the workers 3

Gerard Jackson
21 November 2022

The Black Death provides a particularly vivid picture of the effect on wage rates of a sudden and significant drop in the labour supply. By 1348 the Black Death had reached England. The effect on the labour supply was so swift and severe that Edward III issued the Statute of Labourers Acts of 1349 and 1351 which set maximum wage rates based on the average for the period 1325-1331. The statutes were a complete failure. From 1348 to 1377 successive waves of the Black Death slashed the population from 4.8 million to about 2.9 million1. The result was an increase in the ratio of land and capital to labour resulting in real wages rising by about 50 per cent2. Writing in 1375 John Gower, a country gentleman, lamented:

Labor is now at so high a price that he who will order his business aright, must pay five or six shillings now for what cost two in former times…the poor and small folk…demand to be better fed than their masters3

Henry Knighton, a canon of Leicester, wrote in 1388 that

the elation of the inferior people in dress and accoutrements in these days, so that one person cannot be discerned from another in splendour of dress or belongings, neither poor from rich nor servant from master4.

In the same year canons in Normandy complained the demand for labour had increased to the point that they

who did not demand more than six servants would have been paid at the beginning of the century5.

In 1356 the managers of the Florentine mint reported that the workers

at the mint do not want to work except when it suits them. And if one remonstrates with them, they reply with vulgar and arrogant curse words say they only want to work when it is convenient to  them and provided there are increases in salary6.

This brief foray into medieval economic history was necessary to bring home the indisputable fact that the ratio of labour to capital is of vital importance, an importance that is generally ignored. Therefore, we find that large changes in the labour supply relative to the capital structure have significant effects on wage rates. It is also true, as stated previously, that productivity7 can for a time conceal the negative effects of a heavy immigration inflow.

Continue reading The globalists’ policy of open borders would be catastrophic for the workers 3

The globalists’ policy of open borders would be catastrophic for the workers 2

 Gerry Jackson
7 October 2022

The following table (which I modified slightly) came from Paul Samuelson’s famous economics textbook1.  Whereas Samuelson used land as his fixed input I substituted the capital stock. Production consists of a single stage at the point of consumption. In this highly     simplified model capital is homogeneous2, as is labour, and consists of 1,000 units equalling 1,000 capitalists.The table makes it clear that the height of real wages rates is determined by the labour-capital ratio. The higher the ratio of capital to labour the higher the real wage rate, and vice versa. As we can see, beyond a certain point the return to labour falls but starts increasing for capital. In other words, increasing the labour supply against a given capital structure eventually lowers wage rates and by doing so increases the return to capital. Therefore, Professor Caplan, it is capital accumulation relative to the size of the population that raises real wages, not mass immigration.

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The globalists’ policy of open borders would be catastrophic for the workers 1

Gerard Jackson
31 October 2022

Before examining the economics of mass immigration, meaning open borders, we must take note of the fact that advocates of this destructive policy largely fall into two groups: There is the extremely wealthy self-appointed globalist elite of which the self-righteous Sir Evelyn de Rothschild and Lady de Rothschild are prominent members.

According to the super rich Sir Evelyn any person who has the temerity to oppose this gallant knight’s love of open borders is a racist, particularly if his name is Trump1. Rest assured, however, that Sir Evelyn would not for a moment allow a mass of third-world ‘immigrants’ to invade his beautifully manicured 3,200 acre Buckinghamshire estate.  Instead he and his ilk would damn well make sure that these people would be herded into the crowded streets, schools and hospitals of the working class, thereby driving down their wages and rendering their lives miserable.

Continue reading The globalists’ policy of open borders would be catastrophic for the workers 1

Technology, markets, investment, and Professor Quiggin’s flagrant errors

Gerard Jackson

What proponents of central planning proposals (industrial polices as they like to call them) overlook is that no matter how productive a technology appears to be it will always need capital and entrepreneurship to convert it into a commercial success. Without these factors new technologies with commercial promise will always gravitate to foreign shores.  When a country appears to be lagging behind other countries the interventionists solution is always the same: more intervention. That government intervention, meaning political meddling. may have created the situation these same politicians and their academic advisors now lament never seems to occur to them.

They also appear unable to grasp the fundamental fact that it is savings (spending on future goods as opposed to present goods) that  fuel an economy and it is entrepreneurship that drives it. However, according to the eminent Professor John Quiggin:

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Gold standard,  exchange rates  the Dutch disease

Gerry Jackson

In my last post I explained the crucial role the gold standard played in the classical economists’ theory of free trade. This is of vital importance because the classical approach deals a damaging blow against the globalists so-called ‘free trade’ arguments.  The classical theory argued that for the flow of international goods to be determined by the purchasing power of each trading nation a stable exchange rate was essential which in turn required a self-regulating specie standard. Therefore, only a specie standard could ensure an international division of land, capital and labour would result in these factors being allocated to their most valued ends thereby raising the standard of living above what it would otherwise be.

But the classical economists were adamant that purchasing power parity1 was based on the prices of internationally tradeable goods: domestic goods were excluded. This meant that price levels play no role in their thinking. Frank Taussig emphasised Ricardo’s important position on this issue when he pointed out that the

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The Rothschild’s Gold and exchange rates

Gerry Jackson

One can find numerous articles1 on the net defending what the authors call globalisation. They  strive to equate the great burst of international trade that took place from 1870 to 1914 with what today’s world has been experiencing for several decades, arguing that there is no fundamental difference between the two historical periods and that anti-globalism is a “zero sum game’. However, once we examine the facts we do find a fundamental difference between the two periods that destroys the globalist’s economic argument. But first, let us take a quick look at international trade as it was in the nineteenth century.

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Why do the very rich fund America-hating leftists?

Gerard Jackson

Just a few words on  what to many people, is the amazing spectacle of America’s super rich

lavishing “soak-the-rich” Democrats with oodles of money and other means of material support. So let us take a quick look at some of America’s top-drawer citizens.  There is Warren Buffett who seems to think that his accumulation of billions has made him into a superior human being. We have George Soros whose financial success convinced him that he is an intellectual and moral giant but whose hands drip with the blood of innocents. One need only give this psychopath’s writings on politics and economics a cursory look to see the extent of his ignorance.

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Adam Creighton and Murdoch’s Australian smear Donald Trump

 Gerry Jackson

Adam Creighton (The Australian’s ‘Washington Correspondent’) had barely touched down at Dulles Airport when he wrote a piece for The Australian noting that in his fours years of office Trump had “notched up significant achievements1”. Then Creighton’s irrational loathing for Trump kicked in for a moment when he falsely accused Trump of having a “repulsive personality”. It’s been down hill ever since. Seven days ago he hit rock bottom with a viciously dishonest attack on Trump2. It was atrocious smear-mongering at its worst, written by someone who had lost any sense of common decency he may have once had. A real journalist would not have had anything to do with it, which is why Paul Kelly, The Australian’s editor-at-large, will have loved it.

Regarding the illegal Mara-Lago raid Creighton, insinuated that Trump, and therefore every president before him, did not have the authority to declassify documents3. This is lie. Creighton damn well knows that according to a1988 supreme court ruling a president can declassify anything he wants at any time and in anyway whatsoever. He is not constrained by any official or unofficial procedures. Moreover,  a 2012 decision by Judge Amy Berman Jackson, an Obama appointee, ruled that a president had a right to any document or recordings as his private property.

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Rothschild’s globalism is fascism in a different garb: part 1

Gerry Jackson

What the world needs, according to Lynn Forester de Rothschild, is “inclusive capitalism” (what Mussolini called corporatism) with the aim of “creating long-term value for all stakeholders — businesses, investors, employees, customers, governments and communities….”1.  Standing foursquare behind this one percenter la Pasionaria is her hubby the  90-year-old Sir Evelyn Rothschild, the Don Quixote of the financial world, the same gallant knight that smeared President Trump as “a lunatic”2. And now this pecksniffian pair of self-appointed elitists have the audacity to lecture the rest of us on the so-called benefits of ‘globalism’.

The word for their self-aggrandising nonsense is balderdash. A stakeholder is someone with a direct financial interest in a business. To suggest, for example, that I have a claim on a business of some kind simply because I buy its products or work for it is patently absurd. You can bet your last dollar that when Lady Rothschild, as she likes to be called, speaks of stakeholder capitalism she is not including the House of Rothschild and its innumerable plush offices, banks and opulent mansions.

Continue reading Rothschild’s globalism is fascism in a different garb: part 1